UK consumers ditching credit cards for debit cards
A report by the payments association Apacs has highlighted a significant shift in consumer spending during 2008. While credit card use has increased from £124 billion in £2007 to £126 billion in 2008 there has been a significant shift in debit card spending. Figures from the payments association show that debit card spending in 2007 was £224 billion however this increased to £245 billion in 2008. So what does this tell us?
Interestingly it appears as though three quarters of all transactions in the UK were settled with debit cards rather than credit cards during 2008 although the reasons for this move are unclear. On one hand it could be consumers taking on a more cautious approach by using debit cards which effectively debit bank accounts as soon as payment is made, rather than credit cards which are paid off at the end of each month. However, it could well be the fact that UK credit card limits have been reduced over the last few months and interest charges increased.
Whatever the real reason for the switch to debit card use as oppose credit cards it will come as a great relief to the UK government as this should in due course see a reduction in consumer debt which has been running at record levels.
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